Corzine called to testify before Congress on MF Global collapse

John O'Boyle/The Star-LedgerJon Corzine, the former senator and governor of New Jersey, has been called to testify before a Congressional subcommittee about the collapse of MF Global.

Jon Corzine, the former Democratic senator of New Jersey, has been called back to Capitol Hill.

But probably not on the terms he would have liked.

The oversight and investigations unit of the House Financial Services Committee has asked Corzine to testify at a Dec. 15 hearing on MF Global, the failed futures brokerage that the former New Jersey governor led until earlier this month.

No word if Corzine will accept the invitation. A spokesman for him declined to comment.

The hearing will focus on decisions and events leading up to the firm’s collapse, the effectiveness of regulators that oversaw it and the impact the bankruptcy will have on the firm’s customers, according to a notice circulated yesterday by the committee.

Also invited to testify was Bradley Abelow, MF Global’s president and chief operating officer who also was Corzine’s chief of staff when he was governor; senior officials from the Securities and Exchange Commission and the Federal Reserve Bank of New York; and Gary Gensler, the head of the Commodity Futures Trading Commission, who has recused himself from his agency’s investigation of MF Global due to his ties to Corzine. The two formerly worked at Goldman Sachs together.

The hearing promises to be blistering for those on the hot seat. Rep. Randy Neugebauer, a Texas Republican, oversees the investigations subcommittee, while the Financial Services Committee is headed up by Spencer Bachus, a Republican from Alabama. Both congressmen have been staunch critics of Wall Street regulators since the financial crisis.

MF Global declared bankruptcy Oct. 31, following a week in which its stock price was pummeled by a record quarterly loss and news that it was downgraded to junk status over a $6.3 billion bet on troubled European debt. An attempt to sell the firm fell through after a potential buyer discovered a gaping hole in customer funds held in segregated futures accounts.

A trustee overseeing the liquidation of MF Global on Monday pegged the shortfall at around $1.2 billion, or twice previous estimates. The Federal Bureau of Investigation and the CFTC have opened separate investigations into the missing customer money, which regulators have said appears to represent a violation of federal rules on the segregation of customer assets.

Neither MF Global nor any of its current or former employees, including Corzine, has been charged formally with any wrongdoing.

Meanwhile, Corzine along with Abelow and other current and former MF Global officials have been named defendants in a number of proposed class action lawsuits in recent days. The suits claim, among other things, that MF Global made false and misleading statements about, and/or failed to disclose, its exposure to European debt.

A Federal Reserve spokeswoman and an SEC spokesman declined to comment. Spokespeople for MF Global and the CFTC did not respond immediately to emails seeking comment.